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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The most desirable alternative given up as the result of a decision






2. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand






3. Exists at the point where the quantity supplied equals the quantity demanded






4. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






5. Ed = 0 - no response to price change






6. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






7. Two goods are consumer substitutes if they provide essentially the same utility to consumers






8. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital






9. Models where firms are competitive rivals seeking to gain at the expense of their rivals






10. The additional benefit received from the consumption of the next unit of a good or service






11. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






12. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax






13. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price






14. When firms focus their resources on production of goods for which they have comparative advantage






15. Ed < 1






16. Es = (%dQs) / (%dPrice)






17. 0 < Ei < 1






18. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.






19. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic






20. MUx / Px = MUy/Py or MUx/MUy = Px/Py






21. The practice of selling essentially the same good to different groups of consumers at different prices






22. Exists if a producer can produce more of a good than all other producers






23. AFC = TFC/Q






24. The change in quantity demanded resulting from a change in the price of one good relative to other goods






25. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good






26. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage






27. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it






28. ATC = TC/Q = AFC + AVC






29. The sum of consumer surplus and producer surplus






30. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit






31. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0






32. Ed = 1






33. The additional cost incurred from the consumption of the next unit of a good or a service






34. All firms maximize profit by producing where MR = MC






35. The rational decision maker chooses an action if MB = MC






36. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.






37. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






38. Occurs when LRAC is constant over a variety of plant sizes






39. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good






40. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product






41. AVC = TVC/Q






42. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied






43. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down






44. The lost net benefit to society caused by a movement away from the competitive market equilibrium






45. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage






46. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






47. Ed = 8 - infinite change in demand to price change






48. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms






49. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic






50. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter